How We Saved on Health Insurance

At budget time we always look for ways to steward our resources better. Last year at this time our insurance agent told us that our health insurance premiums were going to be increasing 19%. WOW! That's a lot of money!

Bob, who is responsible for human resources, wasn't satisfied with this outlook. So, he began to look for possible alternatives that would give us the same level of care but at a lower cost to the church without raising the costs for our staff. Pretty lofty goals I know.

He found an alternative called a Health Savings Account (HSA) or High Deductible Health Plan (HDHP). This insurance is designed to shift some of the cost and responsibility for health care to the individual employee. It shifts the cost by lowering premiums for employers while at the same time raising deductibles for emloyees (i.e. $2,000 for individuals and $4,000 for families).

To compensate for the higher deductibles, employees are allowed to put pre-tax dollars into a Health Savings Account that they can use to pay uncovered health costs up to the deductible amount. Employers are also allowed to make contributions to these accounts. These accounts are owned by the employee and money used for health care costs is non-taxable. Money stays in the account year after year. Once the deductible amount is met, allowable health care costs are covered at 100%.

What we discovered was that we could switch to the HSA plan, keep the same provider network, make contributions equal to 75% of the staff member deductible to each participating staff member's HSA, and still save money over the 19% increase on our old health plan.

So, by contributing 75% of the deductible to the staff member's HSA, we met all of our goals of lowering costs to the church, not raising costs for the employee, and maintaining the level of care. We switched to the plan early in 2008.

For more information about HSAs, I recommend that you contact your insurance provider.